Hospital wants back CEO charged in scheme to steal $158 million

Earnest Gibson has worked as administrator at Riverside General Hospital since 1971. The independent community hospital began as Houston Negro Hospital in the 1920's, is facing another financial crisis. Photographed Monday Sept. 27, 2004. Chronicle/Ben DeSoto

Earnest Gibson has worked as administrator at Riverside General...

Even as the former head of Riverside Hospital stands charged with spearheading a scheme to steal $158 million in taxpayer money by bogus billing, the facility's new leaders say they desperately need him back.

The hospital is teetering on financial collapse, and if a federal judge doesn't let Earnest Gibson III return as an unpaid consultant, it may have to shut its doors, warns the three-person conservatory committee appointed in his wake to run the facility.

"It would be extremely helpful for us to work off some of his knowledge in keeping this hospital alive," said William "Gerry" Hilliard, one of the committee members appointed to run the hospital after Gibson had to step down on a judge's order following his arrest last year.

"There are several areas where he could help us," Hilliard continued.

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In coordination with the hospital's three new leaders, Gibson's attorney, Dick DeGuerin, has formally asked U.S. District Judge Lee Rosenthal to permit Gibson to return to the 96-year-old historically black hospital.

Prosecutors fire back that Gibson's return to Riverside could intimidate potential witnesses in the ongoing case, and open the door for further stealing from government agencies.

Gibson and 10 other people affiliated with the Third Ward hospital, including doctors, marketers and a shuttle-bus driver, as well as Gibson's own son, are charged for their alleged roles in stealing from Medicare by billing for psychiatric treatments that were allegedly either not needed or never performed.

"To the extent Riverside is currently facing financial hardship, it is not clear how the defendant, who the grand jury charged with trying to steal millions of dollars from Medicare, can legitimately help Riverside," notes a prosecutor's written response for the judge.

Possible leniency

A trial is set for September. Three people who already have pleaded guilty could be granted leniency in part for cooperating with authorities who have probed the hospital, which is primarily involved in combating drug and alcohol abuse, in addition to providing psychiatric care.

Medicare, the government program that pays for medical and psychiatric care for the elderly or younger people who are disabled, has seen several claims of major fraud.

In March, a federal jury in Houston convicted all seven defendants in a $97 million Medicare fraud scheme involving Spectrum Care, a mental-health care company.

The Department of Justice notes that since its Medicare Fraud Strike Force was launched in 2007, it has grown to operate in Houston and eight other cities. More than 1,700 criminal defendants charged so far had collectively billed Medicare for more than $5.5 billion.

Meanwhile, since his arrest in late 2012, Gibson has been free on bail and under a judge's orders not to have anything to do with the health care industry or the hospital which he led for years.

Abandoned positions

While Gibson has been away, the hospital has been in the hands of the three conservatorship committee members who concede they lack Gibson's knowledge on everything from hospital operations to securing grants.

And matters appear to be dire.

The entire executive staff has "abandoned their positions," states a letter to the judge that is signed by Hilliard as well as the other committee members, Manson Johnson and Ron Wilson.

"Riverside General Hospital is in the process of major renovations and needs to use Mr. Gibson's knowledge in the services needed and the license requirements to meet those needs," it states.

Federal prosecutor Laura Cordova, said in court filings that any notion that Gibson's position would be unpaid is "simply disingenuous."

Since his indictment, Gibson has received more than $654,000 in salary and benefits, according to court documents. That includes paychecks as well as a housing allowance, car allowance and money for attorney fees paid by Riverside.

The Medicare scheme was investigated by the FBI and Internal Revenue Service, Texas Attorney General's Office.

"This case involves massive Medicare fraud," Cordova, the prosecutor, has said in court. "The government's position is not that there were 10 or 12 fraudulent claims, but that the entire business was operated in such a way that the vast majority, if not every single one of the claims submitted to Medicare (for psychiatric care) was in fact fraudulent."

'Only place to get help'

As Gibson and others fight the charges against them in court, community activists have joined to call to find a way to keep Riverside open.

"This is the only place that many of our brothers and sisters who have chemical dependence issues can come to get help," Quanell X said in July. "If they get on the bus and try to go to certain communities and get some treatment, they're going to jail as soon as they step foot off the bus," he said. "We cannot accept nor can we tolerate them shutting this place down."